YouTube launches TV service at $35 a month

People hold up laptops while filming a video underneath signage outside a YouTube Inc. office in the Playa Vista neighborhood of Los Angeles. YouTube on Tuesday announced a new online television service for $35 a month that will compete against smaller subscription packages offered by cable companies. less

People hold up laptops while filming a video underneath signage outside a YouTube Inc. office in the Playa Vista neighborhood of Los Angeles. YouTube on Tuesday announced a new online television service for $35 ... more

Photo: Patrick T. Fallon, Bloomberg

Photo: Patrick T. Fallon, Bloomberg

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People hold up laptops while filming a video underneath signage outside a YouTube Inc. office in the Playa Vista neighborhood of Los Angeles. YouTube on Tuesday announced a new online television service for $35 a month that will compete against smaller subscription packages offered by cable companies. less

People hold up laptops while filming a video underneath signage outside a YouTube Inc. office in the Playa Vista neighborhood of Los Angeles. YouTube on Tuesday announced a new online television service for $35 ... more

Photo: Patrick T. Fallon, Bloomberg

YouTube launches TV service at $35 a month

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YouTube said Tuesday it will offer an online television service for $35 a month that will compete with similar subscription packages offered by cable companies.

YouTube TV will include content from more than 40 networks, including ESPN, ABC, CBS, Fox and NBC. YouTube, a division of Google, has tried boosting its revenue with subscriptions, in addition to money it makes on advertising placed on free content. The company said this week that worldwide, people watch 1 billion hours of YouTube videos daily.

YouTube’s move caters to the growing number of people who cancel cable subscriptions and stream videos online instead. YouTube TV will compete with Sling TV, which streams content from more than 30 channels like ESPN for as little as $20.

Paul Verna, a principal analyst with research firm eMarketer, said YouTube TV could be “highly disruptive” to the industry.

“If any of the live TV services ... has the potential to bring television into the digital age and make it relevant for Millennials, this might be the one,” Verna said.

It’s been a long road for YouTube, which once tangled with TV networks like NBC over bootleg uploads of clips like “Lazy Sunday,” the “Saturday Night Live” sketch that rocketed the video site to mainstream fame. For years, it’s worked with Hollywood on splitting ad revenue from such videos, which paved the way for more conventional licensing deals.

YouTube TV’s offering means Google has beaten Apple to market. Apple, which has its own long-standing relationships with Hollywood through sales of TV shows and movies on iTunes, has been rumored to be working on a streaming TV service. But those talks have reportedly stumbled on price.

“Having an early mover advantage does matter,” Verna said. “It’s sort of like adding another heap to that mountain that Apple has to climb. It doesn’t make it easier.”

YouTube’s service will also include Fox Sports and NBC Sports as well as ESPN. It also includes shows from E, Oxygen and other networks. For $35 a month, customers can create six accounts that will work on smartphones, laptops, tablets and TVs with Chromecast. YouTube plans to provide the service in large U.S. markets, but not internationally. It did not indicate when it will be available.

YouTube made a foray into subscriptions last year when it created YouTube Red, which, for $10 a month, offers exclusive content from some of YouTube’s biggest stars and access to Google Play Music. But analysts said YouTube Red’s growth has been moderate, compared with the large audience that watches videos on YouTube — estimated at more than 1 billion people. The Verge estimated that 1.5 million people subscribed to YouTube Red as of last summer. YouTube has not revealed subscriber numbers or revenue.

“There was no real big pull for (users) to do a (YouTube Red) subscription,” said Eunice Shin, a managing director with consulting firm Manatt Digital. “The content wasn’t compelling enough.”

Part of the reason is that people are used to watching YouTube for free. While it has pushed for longer videos that can generate more ad dollars, many users stick to shorter clips. YouTube TV may be able to shift them over to popular TV shows like “Empire.” (A YouTube TV subscription will also include access to Red.)

YouTube TV will allow users to record live shows to a cloud DVR. It also wants to make search easy: Type in “nerds,” and the movie “Revenge of the Nerds” and TV show “The Big Bang Theory” pop up.

“The TV experience today is a one-size-fits-all model,” said Christian Oestlien, a YouTube product management director. “Anyone who turns on the TV can get the same experience as anyone else. Why can’t TV be as personalized (an) experience as the YouTube we know and love?”

As competition from online services like YouTube TV grows, cable companies are seeking to tap into the streaming market, with offerings that allow people to watch exclusive shows on their phones. Recently AT&T began selling DirecTV Now, a $35-a-month streaming service that allows customers to see channels such as MTV and Lifetime on TVs, smartphones and tablets. Now it’s a question of whether the dollars will flow as fast as the bits.